How Financially Literate Are You?
Canadians are woefully ignorant when it comes to finances. Ottawa says it wants to change that, starting with seniors. The intentions are good, but where’s the money to achieve them?
Jane Rooney wants to change our behaviour.
Who, you may ask, is Jane Rooney and why does she want to change me?
She’s Canada’s new Financial Literacy Leader and she has been handed the daunting task of making us all money-smart. I wish her good luck but I don’t expect much progress in my lifetime.
Ms. Rooney’s appointment, which went almost unnoticed when it was announced last April, flowed from the 2011 final report of Ottawa’s Task Force on Financial Literacy, which was set up by the late Finance Minister Jim Flaherty.
The report bemoaned the lack of financial knowledge among ordinary Canadians, citing examples where billions of dollars in pensions and other benefits were being lost simply because people didn’t know the rules and how to apply for them.
She went on to cite some worrisome statistics including the fact that 40 per cent of Canadians are weak in at least three critical areas of money management and only 40 per cent have a good idea of how much money they need to save to maintain their desired standard of living after retirement (I’m actually surprised it’s that high).
“Our goal is to arm people with the information they need to enhance their skills in budgeting and other activities, and give them the confidence to ask the questions that will help them understand financial products. They need the tools to understand the product, the risks, the cost and the protection behind the product, so they can make a decision if that’s the investment product they want to use.”
That’s a tall order. Working with a budget of $3 million, I’d say it’s just about impossible. Ms. Rooney admits as much. “Strengthening financial literacy in this country is going to be a big job that will take many years to complete,” she said.
Last week, her office launched its first initiative: a plan for strengthening financial literacy among seniors. It’s full of good intentions and proposals to study certain ideas, encourage the private sector to implement others, and work with various organizations to explore the feasibility of relevant programs. There are laudable short, medium, and long-term goals, some of which are easily measurable (“Increase in Canadians’ savings rate, and participation in RRSPs, TFSAs and other savings vehicles”), others of which are not (“Increase in current and future seniors’ awareness of government benefit programs”). There’s very little in the way of immediate action. You can read the document here.
November is officially national Financial Literacy Month. There will be announcements from Ottawa proclaiming the occasion – last year’s was headlined “Harper Government Kicks Off Financial Literacy Month 2013”, even though the Prime Minister himself played no part in the events, leaving the honours to a minister of state that few people have ever heard of.